CRYPTO

Bitcoin jumps back above US$40,000 as Russians switch to crypto

Written by admin

Cryptocurrency prices are climbing after Russia’s ruble sank to another record low and Moscow was hit with new sanctions.

By Wednesday bitcoin had jumped 13 per cent over the last 24 hours to US$43,163 (AU$59,313), according to cryptocurrency tracker CoinDesk.

Other cryptocurrencies moved higher, too. Ethereum climbed 10 per cent on Tuesday to reach US$2,878 (AU$3,954).

Experts believe Russians are placing their wealth in cryptocurrency sources while the Ruble is crippled. (Getty)

Dogecoin rose nearly 6 per cent to about 13 cents apiece.

Virtual currencies are traditionally seen as a risky bet, but as conventional assets experience curbs or greater volatility because of geopolitical tensions, some analysts believe they will gain more traction.

According to Arcane Research, an Oslo-based cryptocurrency research firm, the trading volume between ruble and cryptocurrencies has spiked in recent days on Binance, one of the world’s biggest cryptocurrency exchanges.

The Russian Ruble has plummeted following international sanctions that severely impacted the nation’s central bank to operate. (Unsplash)

Investors appear to be “trying to get out of the ruble” due to its “drastic devaluation after all the sanctions,” said Bendik Schei, head of research at Arcane.

Schei added that more people were switching to Tether rather than bitcoin.

While bitcoin is the world’s most valuable cryptocurrency, Tether is known as a “stablecoin” since it is pegged to the US dollar.

“This is where they find the most comfort at the moment,” Schei said of investors.

“Under the current market conditions, I’m not surprised to see investors, at least those in Russia, seeking stablecoins …This is about saving their funds, not investing.”

Over the past week, Tether has largely held firm at about US$1 (AU$1.37) apiece.

People take part in a protest against the Russian invasion of Ukraine in front of the Russian embassy in Vilnius, Lithuania. (PA)

The scramble came as the ruble plunged Monday, trading at 104 to the US dollar. It was little changed early on Tuesday.

Western powers have frozen the assets of Russia’s central bank with the aim of making it harder for Russia to mitigate the effect of sanctions on some of its biggest lenders and other companies.

The steps are meant to prevent Russia from accessing a “rainy day fund” that officials said Moscow had been expecting to rely upon during the invasion of Ukraine.

A woman stands in a currency exchange office in St. Petersburg, Russia. (PA)

Instead of using the reserves to buffer a plummeting ruble, Russia will no longer be able to access many of the funds it keeps in US dollars.

Apart from offering investors a relatively safe haven, cryptocurrencies could offer Russians a way of evading sanctions, according to some experts.

US and EU sanctions rely heavily on banks to enforce rules. If a sanctioned business or individual wants to make a transaction denominated in traditional currencies such as dollars or euros, it’s the bank’s responsibility to flag and block those transactions.

But digital currencies operate outside the realm of standard global banking, with transactions recorded on a public ledger known as blockchain.

In less than two weeks, two million people have fled Ukraine

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

About the author

admin

Leave a Comment